Construction spending grows

Spending in November was at highest level since June 2010, although gov't funds are dropping

Construction spending in November 2011 hit its highest level since June 2010, fueled by new growth in industrial and commercial projects, the Associated General Contractors of America reported today.

Construction spending nationwide totaled $807 billion in November 2011, up 0.5 percent from the November 2010.

“Several segments of construction appear to be climbing out of a hole,” said the association’s chief economist, Ken Simonson, who expects continued gains this year in apartment houses, oil refineries and factories.

The roof repairs at the San Diego Museum of Man in Balboa Park are just one of many examples of alterations and additions going on in the county's nonresidential construction sector. Roger Showley

The roof repairs at the San Diego Museum of Man in Balboa Park are just one of many examples of alterations and additions going on in the county's nonresidential construction sector.

In San Diego County, private construction is still relatively flat although it is improving, said Jim Ryan, government relations director of the association's local chapter.

"This is a great time to build because it's like there's a sale going on," he said. "Prices are pretty low."

Nationwide, spending rose in each major construction sector between November 2010 and 2011:

12.6 percent in manufacturing.

12.0 percent in retail, warehousing and agriculture.

10.0 percent in private schools, colleges and training centers.

9.0 percent in private transportation projects.

8.4 percent in power projects, including oil and gas.

3.4 percent in residential construction, including condos, apartments and renovations.

Despite those rises, overall spending in November was only 0.5 percent higher than a year ago, thanks to cutbacks in government spending programs, which declined by 5.3 percent over the past year. The federal budget for 2012 includes a 6.2 percent drop in construction spending.

Stephen Sandherr, the association’s chief executive officer, warned that unless lawmakers restore some of the funding, "they risk undermining a long-awaited recovery for the construction industry that could put tens of thousands of people back to work. These cuts aren’t helping balance the budget, but they are keeping a major segment of our economy in check.”

In San Diego County, government-funded projects - including new barracks at Camp Pendleton, public school renovations and highway work - are "still doing okay," Ryan said.

But Ryan expects that many of those programs will weaken this year. The Pentagon is in the midst of shaving its budget. School projects, funded by bonds in 2006-2009, is coming to an end. And highway spending is expected to dip this year, followed by a rise in 2013 as renovation begins on the I-5.

In the meantime, construction employment has continued to fall in San Diego County. In November, it dropped to its lowest point since early 1998.